Citi may write down $8B on CDOs in third quarter: analyst

JoyceKoh

NEW YORK (MarketWatch) -- Deutsche Bank analyst Mike Mayo on Tuesday said he expects Citigroup
C, +0.14%
to write down about $8 billion on its collaterized debt obligations (CDOs) in the third quarter. This comes after Merrill
MER, +1.00%
said Monday it sold CDOs for 22 cents on a dollar. He noted Citi has $22.5 billion of net CDO exposure and based on Merrill's write-downs, could have another $7 billion of write-downs and an additional $1 billion loss on its remaining $2 billion exposure with monoline insurers. Mayo said Citi's "decision about raising new capital could be closer than we previously thought." He maintained his hold rating on the bank, and lowered his third quarter earnings estimate for Citi $1, to a loss of 59 cents a share.

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